The investment in cybersecurity firms in the UK looks healthier despite the COVID-19 crisis.
Cybersecurity startups in the UK have secured close to half-billion pounds (£496m) in the first six months of 2020, according to The LORCA Report 2020. There has been a 940% increase in cyber funding as startups raised £104m in the first two months of lockdown alone. The spike in funding is interesting, as the world is witnessing an economic downturn caused by the COVID-19 pandemic. However, there is also the fact that the coronavirus pandemic has put cybersecurity front and center. This is mainly due to the sudden transition to remote working, excessive sharing of sensitive medical data, and a significant rise in the collaboration between the private and public sectors. The cybersecurity ecosystem is still in a nascent stage and is also facing several new challenges owing to continuous growth.
The majority of these investments are mainly targeted towards growth stage firms while early-stage startups are still struggling, notes the report. Startups that are at the seed and venture stages secured only 6% of investment since the start of the year. One of the biggest hurdles is to garner funding access to early-stage startups for the UK to be in the top spots. More than half of cyber startups saw a reduction in investor interest since lockdown.
London is now the cybersecurity capital of the UK, with 281 start-ups (44%), while Edinburgh and Manchester are gradually becoming prominent cyber zones, found the report.
According to the report, there are three main trends that may help UK cybersecurity startups to grow further. Firstly, the cyberspace needs to be consolidated as it has become crowded and complex. CISOs need to prioritize products that can be easily integrated into an existing stack and push the industry towards platform plays and product ecosystems controlled by larger players.
Secondly, access to cybersecurity shows an unequal distribution, especially in the case of small businesses and charities, which present an underserved segment of the economy. It is important for startups to address their needs and bridge the digital divide and make security more accessible. Lastly, there is higher consumer usage and engagement with digital technology, especially during the pandemic. This is putting them at higher risk from a security perspective. Hence, individual security could become an upcoming innovation trend as this market is in a nascent stage.